Bank Tries To Quell Protests

January 14, 2004|By KENNETH R. GOSSELIN; Courant Staff Writer

New Haven Savings Bank is attempting to calm the storm of protests against its proposed conversion to a public company by putting off paying senior managers and directors millions in stock for at least a year.

But those efforts did little to appease some critics Tuesday.

Attorney General Richard Blumenthal, a leading critic of the conversion, called for a much longer prohibition -- at least seven years, and only earlier with the approval of the state banking commissioner.

"On the face of it, this proposal is less than meets the eye," Blumenthal said. "It may be a clever way to circumvent the regulatory process."

Blumenthal said he would request that the longer prohibition be made a condition of any approval of the conversion by state banking regulators.

Opponents of the conversion from depositor-owned to shareholder-owned have questioned the motives for the change because a select group of high-ranking insiders stand to gain millions in stock-based compensation.

The bank said it needs to convert to a public company to expand more aggressively and remain competitive. Going public and raising $1 billion in an initial public offering would be paired with buying two Greater Hartford banks: Savings Bank of Manchester and Tolland Bank.

New Haven Savings' proposal was contained in an amended conversion plan filed late Monday with the state Department of Banking.

New Haven Savings spokesman Paul McCraven said it is not now known whether paying senior managers and directors in stock will again be proposed a year after the bank is a public company. It also wasn't known in what form -- or what total dollar value -- might be proposed, McCraven said.

Any stock compensation would have to be approved by shareholders.

Under the bank's proposal, senior managers would still receive salary and bonuses in cash, while directors would be paid annual and per-board meeting fees. But they would not be entitled to stock options or shares of restricted stock.

Much of the criticism has been targeted at the employee recognition and retention plan, which has been valued at $35 million or more. Senior managers and directors would share in that plan.

In a written statement issued late Tuesday, New Haven Savings chairman and chief executive Peyton R. Patterson, said she hoped removing the controversial stock compensation issue would be akin to extending the olive branch to critics of the conversion.

In addition, Patterson noted the bank would increase by $10 million, to $40 million, the size of the charitable foundation of the new bank, to be named New Alliance Bank.

Some critics of the conversion, such as Mayor John DeStefano Jr., said the proposal was a step in the right direction. But DeStefano said he still favored New Haven Savings remaining a mutual. The change to a public company all but ensures that the bank would eventually be bought by a larger competitor, DeStefano said.

State Banking Commissioner John P. Burke must either approve, approve with conditions or deny the bank's conversion and acquisition plans. A ruling had been expected by the end of the month.